Commercial Grade

by Cicero, The appraisal philosopher

In that annual rite of spring the new rent stabilization increases have been announced by the Rent Guidelines Board. This year the increases are fairly modest, only 2% for a 1-year lease and 4% for a 2-year renewal. The vacancy allowance remains the same. This is great theater for us real estate nerds, where the landlords are all depicted as greedy villains by the tenants, and the tenants are all depicted as greedy freeloaders by the landlords. The current increases are the lowest that they’ve been in ten years, and well below the 10-year average of 3.5% and6.53% for one and two-year leases, respectively, as illustrated below:

For Leases ————Lease Term——-

Starting Between 1 Year 2 year

10/1/02 - 9/30/03 2 .0% 4 .0%

10/1/03 - 9/30/04 4.5% 7.5%

10/1/04 - 9/30/05 3.5% 6.5%

10/1/05 - 9/30/06 2.75% 5.5%

10/1/06 - 9/30/07 4.25% 7.25%

10/1/07 – 9/30/08 3.0% 5.75%

10/1/08 – 9/30/09 4.5% 8.5%

10/1/09 – 9/30/10 3.0% 6.0%

10/1/10 – 9/30/11 2.25% 4.5%

10/1/11-9/30/12 3.75% 7.25%

10 year average 3.50% 6.53%

From James Dunne in The CREative Department

Want to be on the 90^th Floor of One57? You’ll have to pay $90 Million. I happen to be jogging through Central Park and noticed that the construction appeared to have topped off – according to the Commercial Observer today, it has. Here’s the shot I took; One57 towers above all the surrounding buildings:

Gary Barnett of Extell Development announced back in May that an unnamed billionaire was in contract to purchase a penthouse unit for $90+ Million. Here is a picture of the views from the One57 website:

While much uncertainty remains in the housing market across the U.S., including NYC, the luxury market continues to break records. Extell reports they have $1 Billion worth of units in contract at One57. However, the penthouse sale represents the very top of the luxury market, and as Jonathan Miller estimates, a view of Central Park can add 25% to an apartments price, plus there is a 9% premium in NYC for condo vs. a co-op. This adds up to 34% premium to be in the newest luxury condo building with views of Central Park.